The MacNeil/Lehrer NewsHour

MR. MacNeil: Good evening. I'm Robert MacNeil in New York.

MS. WOODRUFF: And I'm Judy Woodruff in Washington. After the News Summary, another in our series of debates about the Presidential candidates. Tonight, Bill Clinton, what is it that supporters like and what bothers the skeptics? Five people with different views join us. Next, tomorrow's election in Israel; we have a preview report. And then a conversation with Paul Volcker about the U.S. role in the new world economic order. NEWS SUMMARY

MR. MacNeil: President Bush struck out at Ross Perot today. He was responding to a report in yesterday's Washington Post which said Perot had become angry with Bush during his Vice Presidency and had hired investigators to look into the financial and personal conduct of Mr. Bush and his family. Perot's falling out with Bush centered on American MIAs in Vietnam. This afternoon President Bush was asked about the Perot investigation report.

PRES. BUSH: Well, I'd better count to 10. I prefer not to take that question right now, frankly.

REPORTER: Are you aware of the inquiries?

PRES. BUSH: No. There's something -- there's something not very pleasant about all this. And let me tell you this. It's fine to investigate on one's own Vice President of the United States -- no evidence to support any investigation -- but I feel a little tense about it when they -- if the reports are true of investigating my children, my family, for something -- I don't think that's particularly American.

MR. MacNeil: Perot's spokesman told the Washington Post that Perot had hired a Washington law firm to do a public records check. He said, "No investigators were employed, no laws were violated, no one's privacy was invaded. Mr. Perot does not think his actions were inappropriate." Judy.

MS. WOODRUFF: President Bush today signed a $1.1 billion emergency aid bill to help U.S. cities. The money is to be used for disaster relief following the Los Angeles riots and the Chicago flood. It also will provide more than 400,000 summer jobs for disadvantaged teenagers. The bill was a scaled-down version of the $2 billion plan originally passed by the Senate. Bill Clinton was in Houston today talking about his plan to help the cities. In a speech to the U.S. Conference of Mayors, the Democratic Presidential Candidate said that his economic program would allocate money to public works projects.

BILL CLINTON, Democratic Presidential Candidate: This $20 billion will create a million jobs a year in each of the four years, driving funds into your cities. It will help us to do the things you said you wanted. It will enable us to spend more in infrastructure and in law enforcement and in education and in social services. It will enable us to expand the community development block grant program which as a governor I also believe strongly in. And this will happen without spending one red cent of state or local money or private sector money.

MS. WOODRUFF: The Supreme Court today struck down St. Paul, Minnesota's ban on cross burnings, swastika displays and other expressions of racial bias. Advocates of such laws said they were necessary to control an up surge in so-called "hate crimes," but in a unanimous ruling, the Justices said the ordinance violated free speech. Writing for the court, Justice Antonin Scalia said, "Let there be no mistake about our belief that burning a cross in someone's front yard is reprehensible. But St. Paul has sufficient means to prevent such behavior without adding the first amendment to the fire."

MR. MacNeil: South African Archbishop Desmond Tutu today declared his country on the brink of disaster. His comments came a day after African National Congress Leader Nelson Mandela refused to participate in the latest round of power sharing talks with the white minority government. Mandela accused the government of taking part in a wave of bloody political violence, including last week's massacre of 42 people in the black township of Boypatong. Jeremy Thompson of Independent Television News filed this report from Johannesburg.

ARCHBISHOP DESMOND TUTU, Cape Town: And keep the moment silent for the people of Boypatong who were killed.

MR. THOMPSON: As he prayed for the victims of the massacre, Archbishop Desmond Tutu wept openly at the crisis in his country, appealing to political leaders to come to their senses and talk.

ARCHBISHOP TUTU: For our politicians to stop trading insults and making political capital of the violence.

MR. THOMPSON: But President DeKlerk flew to Spain on an unofficial visit today, leaving the future of democracy negotiations hanging in the balance. A bitter rift has now developed, with Nelson Mandela under growing pressure from ANC followers to break off all dealings with the government. If the ANC do pull out of the multiparty forum, constitutional talks could collapse, though today the government insisted negotiations were still the only answer.

STOFFEL VAN DER MERWE, Government Spokesman: Everybody knows that we have to find, negotiate, and negotiate a solution, we can do that before we destroyed the country or after we destroyed the country, but negotiate we will have to.

MR. THOMPSON: But following the Boypatong massacre, the mood is highly volatile. As the ANC marches with on its campaign of peaceful mass protests, there are increasing calls for more militant action.

MS. WOODRUFF: In the Yugoslav breakaway republic of Bosnia today, Serb forces launched a deadly new mortar attack on the capital city of Sarajevo. Like a similar attack last month, the shells fell on a street crowded with civilians. Michael Nicholson of Independent Television News has more.

MR. NICHOLSON: Sarajevo has been waiting for a lull. The Serbs are determined there should be none. Timed to do the most damage and kill more effectively, they sent in their shells just as people went off to market. The first of the dead and wounded were crowded into hospitals already full, among those killed three children playing while their mothers were shopping. The barrage was probably prompted by Bosnian forces firing on Serb mortar positions in the hills. It's a suicidal tit for tat. Another seven people were killed by shrapnel and at least sixty more were wounded, some so badly the death toll could be doubled by this evening. It is a repeat of last month's slaughter when Serb mortars killed 16 in a bread queue. An outrage at that has done nothing to curb the Serb gunners. It's hard to believe that since this city came under siege 11 weeks ago, over a thousand, two hundred and fifty people have been killed here and five and half thousand have been wounded. And yet, only last night did the Bosnian leaders finally and formally declare themselves in a state of war.

MS. WOODRUFF: The latest figures from Bosnia put the death toll at eight and number of wounded at more than eighty in today's attack. The President of Moldova today accused Russia of waging an undeclared war against his former Soviet republic. He said Russian members of the former Soviet Red Army stationed in Moldova were fighting alongside Slavic separatists against the Moldovan government. The ethnic battles in the mainly Russian breakaway region killed the reported 380 people over the weekend. The involvement of Russian troops was confirmed in Washington by State Department Spokeswoman Margaret Tutwiler. She urged Russia to negotiate a withdrawal of its army with Moldova.

MR. MacNeil: The international community today pledged $880 million to rebuild war-ravaged Cambodia. Pledges from 32 countries and a dozen international organizations came at a one-day United Nations conference in Tokyo. The total was nearly $300 million more than the U.N. had requested. And it was offered despite a refusal by Khmer Rouge guerrillas do disarm. The U.N. peace plan for the country demands the disarmament of all rival factions. U.N. officials said the Khmer Rouge could be cut off from the aid if it fails to comply. The Khmer Rouge conducted a widespread genocide campaign against the Cambodian people during its brutal three-year rule in the 1970s. The Philippine Congress today proclaimed an official victor in the May 11th elections. He is Gen. Fidel Ramos, the former defense secretary and the favorite candidate of President Corazon Aquino. The 64-year-old Ramos officially takes office June 30th.

MS. WOODRUFF: That's it for the News Summary. Now, it's on to a forum on Bill Clinton, a preview of tomorrow's elections in Israel, and a conversation with the former Chairman of the Federal Reserve, Paul Volcker. FOCUS - THE CLINTON FACTOR

MS. WOODRUFF: First another in our series of Presidential forums. Tonight our focus is on Arkansas Governor Bill Clinton. While he has cinched the Democratic nomination, most recent national public opinion polls continue to put him at the bottom in a three-way race against President Bush and Texas billionaire Ross Perot. With just three weeks to go before the Democratic Convention in New York, Clinton has been using what was traditionally a down time for candidates to stake out some high profile positions, from an economics plan to the state of race relations. Clinton's positions have sparked controversy and debate. We get a sample of that now from five people. Jim Blanchard is the former two-term Democratic Governor of Michigan. He is chairman of the Clinton for President Campaign in Michigan, and he's now an attorney with a Washington, D.C. law firm. Roger Johnson is the chairman and chief executive officer of Western Digital Corporation. A lifelong Republican, he has co-hosted fund-raisers for Clinton. He joins us from Irvine, California. Roger Wilkins, longtime civil rights activist, is a professor of history at George Mason University in Virginia. Richard Cohen is a syndicated columnist with the Washington Post. And Paul Greenberg is the editorial page editor of the Arkansas Democrat Gazette in Little Rock, and syndicated columnist. Well, Mr. Johnson, I'm going to start with you. If you're a lifelong Republican, how is it that you are holding fund-raisers for a Democrat, in particular, this Democrat?

MR. JOHNSON: Well, I think the issues this year facing our country are so large that we need to search for a leadership who will address those issues. And that goes way beyond partisan politics. And when I first talked with Gov. Clinton several months ago, and even till today, he's still the only candidate at this point who tells me exactly what he's going to do if he should be elected. I don't agree with everything he tells me, but I know what I'm going to get and I agree with a whole lot of the things that he's proposing. I want to make it clear though that we have till November 3rd to make our minds up, unless someone's changed the election date, and still waiting and open to hear the specifics from the administration and specifics from Ross Perot.

MS. WOODRUFF: Have you ever supported anybody other than a Republican before?

MR. JOHNSON: Not for the Presidency, not since Eisenhower.

MS. WOODRUFF: What is it -- as I understand the story, you were quoted in the Los Angeles Times, and Gov. Clinton saw the quote, called you up, you all had a long talk -- what was it that he said that captured your imagination?

MR. JOHNSON: Gov. Clinton, I think, is a different type of Democrat, different from any that I have ever known, in that he believes that the country needs to grow out of the terrible problems it's in now. He's not a "divide up the current wealth" type of Democrat. His economic programs are all fundamentally aimed at growth, improving our competitiveness. He does believe, which I think is a Democratic Party heritage, that you can do that and still improve a wide range of the social problems in our country. I believe that also. The economic growth of the country and the social problems in education, health care, human rights, particularly human rights, are closely tied to our economic benefits. And I think he believes we can cure both and I like some of the specific programs he's put in place to do that.

MS. WOODRUFF: All right. Paul Greenberg in Little Rock, you're different. You've known and you've written about Bill Clinton for years. Is this -- is what Bill Clinton is saying in your mind what you just heard Mr. Johnson describe?

MR. GREENBERG: I'm sure Bill Clinton said exactly what Mr. Johnson wanted to hear. I think if I were a lifelong Republican in Michigan, I too would be tempted to vote for Gov. Clinton.

MS. WOODRUFF: In California.

MR. GREENBERG: In California, I'm sorry. But of course, I've followed Bill Clinton for a long time and I've never been able to find a single coherent principle at the core of his politics that I could feel confident he would not sacrifice in the heat of battle for another political office.

MS. WOODRUFF: That's a really stiff charge to make against somebody. What do you base that on -- never a principle that he was willing to stick with?

MR. GREENBERG: It's very hard for me to imagine any stand that he would take that would endanger his election. I think his stand on the war in the Persian Gulf is a pretty good example. It wasn't really a stand. It was more of a waffle. He came out, more or less, for and against the war, and then once it had been decided took a stand four square in favor of the victory. I think that in general, Bill Clinton has been able to gauge very well the political feelings and prejudices and attitudes of his audience and address them with remarkable aptitude. He's very good at that. I can understand why people across the country would be very much attracted to our governor.

MS. WOODRUFF: Jim Blanchard, you're a former governor, yourself. You got to know Bill Clinton that way. What about this comment that Paul Greenberg makes that he's never seen him stick with a principle?

MR. BLANCHARD: I've known Bill Clinton for 10 years and I've known him as a governor and as a friend. And even in Michigan, recently, he went to a UAW hall and did not embrace completely the UAW position on trade. We would have liked him to have done that. He went to the Reagan Democratic country, Macomb County, and spoke about racial harmony. I've known him, as I said, for 10 years, and I've never known him not to stand up for principle, never known him not to be the innovative governor he is. And that's why I support him. I think Bill Clinton is not only creative, innovative, and dynamic, but he has the potential of being the most exciting leader this country has had in a generation.

MS. WOODRUFF: Well, how do you square that with what Paul Greenberg said? He said he's gauged his -- I wrote down what he said -- he's gauged his political feelings on what the audience wanted to hear, and that's what he's --

MR. BLANCHARD: Well, you know, the author, Theodore White, wrote about the Presidency many times and said that great Presidents are leaders in tune with their times. Maybe you could say that about any great leader or great President. I don't know. I can tell you though that being a governor of any state -- not to mention a very poor state like Arkansas -- is a tough job. And if you think you're going to please the people or the columnists or the editorial writers, you know, you really have to be naive.

MS. WOODRUFF: Richard Cohen, where do you come down on this question of principle or no principle?

MR. COHEN: Well, I'm neither a Clinton -- I'm not hostile to Clinton. I'm certainly not a way-over-the-top fan of Clinton's, but I detect principle in him. I remember the letter that he wrote, the one that he got in so much trouble about, to the draft board saying that one of his principles was racial harmony, that he believed very strongly in what seemed to me was bringing - -

MS. WOODRUFF: Back when he was in his early --

MR. COHEN: Yeah, in his early twenties -- that seemed to me to do something about what was a racial situation in Arkansas, which was a deep Southern state. And you can trace that and everything and he said and a lot of what he's done for, what is it now, 30 years or so. So I detect principle there and I find that admirable. I think you can find principle in what he's done or attempted to do in improving education in the state of Arkansas. He talks about it a lot. He's had some programs about it. There's been real commitment on the part of he and his family, particularly his wife. I don't find -- if you want to know what I think -- I don't find great principle in his position on capital punishment. I can't believe that he believes in capital punishment. I think he's taken a dive on it to get reelected in Arkansas. I don't detect great principle in what he says now about where he was on the Vietnam War. I liked his letter back then. I'm not so crazy about it when he explains it now. I would have liked him to take a stronger position. But I don't see him in any way as a crass opportunist compared, incidentally, to the field that we now have, with George Bush and Ross Perot. I mean, he looks like a rank amateur to me.

MS. WOODRUFF: Roger Wilkins, let's go down some of the points that Richard Cohen brought up. He's talked about race relations and what Clinton said in that letter when he was 23-years-old, when he was, of course, writing to the head of the ROTC there at the University of Arkansas, but he made a comment in that letter about how committed he was to bringing the races together, something to that effect. And yet, in the past week, you and others have been critical to him because he has criticized this black rap singer, Sister Souljah. How do you reconcile those two things about him?

MR. WILKINS: Well, I think that you have to say first of all that the basic character issue in this campaign is not Bill Clinton. It's George Bush. George Bush has demonstrated in the last four years he has neither the character nor the judgment to be President of the United States. He demonstrated it by picking Dan Quayle. He demonstrated it by lying to us in one sentence, in one breath, by saying that Clarence Thomas was the best qualified man in the country to be on the court, and that race wasn't a factor, and he demonstrated it by going to Rio and disgracing us. so you have to put -- you have to put the issue in context. Now, I do have questions about Bill Clinton, but the questions don't even come close to the anger and the dismay that I have about George Bush.

MS. WOODRUFF: But we're talking about Clinton tonight and what - -

MR. WILKINS: I understand that. But when we talk about character in this campaign, it's always as if somehow George Bush's character is a given, good character is a given. And I don't think that's right and I don't think we should ever discuss it without saying that. Now, yes, I am very disturbed by Bill Clinton's stands on race. I think he's got a lot of black friends, some of whom are very good friends of mine. I think he's cultivated those people for a long time. But I don't -- I don't discern much -- and he talks a good game, but I don't discern much action behind that. Arkansas is one of the only two states in the union that doesn't have a civil rights act. Clinton's been governor for five terms. After Los Angeles, Peter Jennings asked him straight out, what would you have done, Governor, had you been President in the wake of this riot? And Bill Clinton, the first thing out of his mouth was, well, I would have signed the crime bill. People need jobs out there. People need services out there. People need compassion. People need leadership, and the crime bill was the last thing to say. Finally, he did ambush Jesse Jackson, and everybody in the country knows that. His people --

MS. WOODRUFF: You mean when he criticized Sister Souljah at the Rainbow Coalition meeting?

MR. WILKINS: Yeah. His people telegraphed the punch to Tom Edsel of the Washington Post and said that Clinton two days before he went to the Rainbow Coalition, they said, Clinton's going to take on elements of his own core. He goes and he attacks Jackson for having Sister Souljah there. If he were so upset about Sister Souljah, he could -- a month had transpired. He could have said it any time within that month; he didn't.

MS. WOODRUFF: Jim Blanchard, what about that? I mean, he's --

MR. BLANCHARD: I wasn't there. I'm not sure of all the dynamics. I do know that it's -- when you get different people who are running for President, you get a lot of ego, and there's a lot of ego involved in this Jackson-Clinton rift, or whatever it is. I hope that gets healed. Let me just say I don't think you can fault --

MS. WOODRUFF: You mean ego on both sides or --

MR. BLANCHARD: I do. I just don't think you can fault Clinton for saying that someone who says you ought to be doing killing, he's somehow wrong. I think he was right. I'm not sure of the exact context in which he raised the remarks. Roger may be right, that she had discussed this a month before -- I understand she was on the program the day before. All I know is that I went to Little Rock and I watched Bill Clinton announce for President. He's the first candidate I've seen in years to mention racial harmony and bringing this country together, and the fact that as a Southern he would not allow President Bush or anyone else to play the race card against him. And I saw him do it in Macomb County, Michigan. And I believe that deep, deep in his heart and soul, he is 100 percent committed to the equality of men and women and to better race relations and human rights in this country. And I think that's something that's long overdue in America, and I hope Bill Clinton will be able to convince Roger Wilkins of that fact before too long.

MS. WOODRUFF: But, Paul Greenberg, do you disagree with anything Jim Blanchard is saying?

MR. GREENBERG: Most of it, I guess. I haven't peered into Bill Clinton's heart and soul. I haven't been able to find it. But I do think that his stand at the convention with Jesse Jackson added something to his definition. I think it was a popular stand. I never believed that Bill Clinton wouldn't do what was right and wouldn't come out against racism, no matter where it came from, if it was popular. What I have my doubts about is whether he would take a right stand when it was unpopular, whether he would support a civil rights law, for example, in Arkansas, and get it on the books. In that draft letter many years ago, there is one consistent theme that really deserves attention, because I think it foreshadows the man that the young fellow became. And that's when he was confronted by very strong principles, service in the military or fighting against the war and he chose to preserve his political viability. And I think a good look at his record would say that he's consistently done that ever since.

MS. WOODRUFF: Roger Johnson, is that something that bothers you, whether -- I mean, earlier this year, there was an awful lot of publicity just about the draft in Vietnam, questions of marital infidelity, are those things that you think matter in your assessment of Bill Clinton?

MR. JOHNSON: Well, I can only talk about my own knowledge of the governor in the past -- goodness -- I guess eight months or so. I haven't known him for 20 years. But I've seen him talk here in Orange County three times. I've talked with him personally about some issues, and I then watch everything he says across the country, and I find that he is, if anything, consistent. He's told me things I don't like, and I told him I don't like him and he said, well, we disagree, let's talk some more. But when he goes out in front of the people here in Orange County, he says the same thing. When he was in Los Angeles, after the riots, he said the same things. When I hear him on radio talk shows, he's saying the same things. We've had his wife here, Hillary. My wife and I have talked with her. She's a devoted supporter of children's rights and children's issues. I think they're both very sincere, solid people.

MS. WOODRUFF: Richard Cohen, is that a picture of the same Bill Clinton that other folks are seeing, do you think? and Bill Clinton is the dynamic, innovative governor who was voted the most outstanding governor by the nation's governors. And I think in our working with him he's been innovative, honest, loyal, and very much an advocate for the kinds of changes our country needs.

MS. WOODRUFF: Roger Wilkins, is that the kind of thing you're talking -- when you hear Jim Blanchard say he believes in government as a catalyst for change, for fixing things, he believes in -- what'd you say -- human rights -- was that the term?

MR. BLANCHARD: Absolutely. I mean, is that the kind of thing, does that convince you when you hear that?

MR. WILKINS: It just like sounds a guy from Michigan State trying to figure out things. Got you, Jim.

MR. BLANCHARD: He got me.

MR. WILKINS: No. I'll tell you. it seems to me that my problems with the governor are epitomized by what he did at the Rainbow Coalition. Everybody wants responsible and prominent black people to do something about kids in the inner city. We want ourselves to do it. We put great pressures on ourselves to open up opportunities for ourselves. The white community wants us to change their behavior and their attitudes. Jackson is a fellah who will engage these people. He went and engaged Sister Souljah and he engaged in her in a way that moved deeply people who saw the confrontation between them the night before Gov. Clinton came to speak. And he was moving her to participate in the electoral process and to use her power as a communicator to communicate to other young people and bring them into the process. You cannot have it both ways. You cannot say, Jackson, you, people like you go out and change these people and bring them into the process and then for political purposes slap the heck out of them for doing so. Gov. Clinton could have found out, had he been interested in what Jackson was doing in an issue, by asking only one question. He didn't do that because he wanted to take a cheap shot. And then after that, Jim, after that, what he did was to say those of us who criticized him, criticized him because he's white. And that is cheap and trashy. So he's going to have to overcome a lot to prove to me that he is a man of honor and a man of principle.

MR. BLANCHARD: Well, I'm confident he will, Roger, but let me just say that I think that Jesse Jackson has let his ego get too much in the middle of this Sister Souljah thing, I really do.

MS. WOODRUFF: But that's not what Roger Wilkins is talking about. He's talking about telegraphing -- that, you know, this was a calculated move -- using --

MR. BLANCHARD: Joel Ferguson, chairman of the Jesse Jackson campaign in Michigan, said that Bill Clinton would have been remiss had he not criticized Sister Souljah's remarks. So, you know, there's two sides to this. I happen to think more has been made of it than should be and that Bill Clinton obviously has got some work to do with Roger Wilkins and many other viewers.

MS. WOODRUFF: Too much being made of it, Richard Cohen?

MR. COHEN: No, I don't think too much is being made of it. I think what Sister Souljah said was reprehensible and she needed to be criticized and someone had to say it. And secondly, Jesse Jackson gave her a forum based upon what she had said, not upon anything else, not about her ability to be a singer or anything. And last but not least, you know, Roger's right. I mean, this was staged,but it was good politics. And Bill Clinton is a politician.

MS. WOODRUFF: We haven't talked about what Bill Clinton has been talking about for the last day or two, is his new economic or new and revised economic plan. Roger Johnson, you said early on that you like basically what Bill Clinton is talking about -- I'm sorry, basically that's what you said -- you said you had some points where you disagreed with him. Is that something? Is it the economic plan? Is that a big part of the reason that you think he's the right person?

MR. JOHNSON: Well, as I said earlier, we'll see what -- the other two right now are abdicating -- we'll see what they come up with, but right now, the governor's plan, first of all, he has a plan. So I know what he's talking about and I can look at it, question it, agree, and disagree. I don't know what I'm getting with the other two. The current administration, I'm afraid, their current approach is to just keep hands off. And I don't thinnHne can do that. I don't believe in a lot of government involvement, but I also don't believe the government can abdicate. I think that a lot of the discussion I've just heard in the past few minutes deals with some political tactics and I do wish that the press and others would focus a lot more on the issues that face the country. This country is in a terrible economic situation vis-a-vis its international competitiveness. I think the tax credits that the governor's proposing are good.

MS. WOODRUFF: These are business tax credits.

MR. JOHNSON: I think it's a good approach.

MS. WOODRUFF: All right.

MR. JOHNSON: The investment tax credits, the R&D tax credits. I think he's realistic when he says you can't wipe out this deficit, which is really killing us in four years; maybe we can get half of it. Maybe people want to pipe it out in four years. I don't think we can do it. He doesn't think so either. I think we have to build the infrastructure again. We can't correct the deficit by closing down the country. So we're going to have to probably raise some taxes, that terrible word. I don't like some of the approaches he's using to raise taxes, but those are tactics; we can deal with those.

MS. WOODRUFF: Paul Greenberg, you criticized Bill Clinton, again, for not having principle, but on this -- at least on this budget, on the economic plan, he's being specific at a time when the other two main candidates are not being specific. Do you give him any credit for that?

MR. GREENBERG: You're right, Judy. He is being specific. He does have a plan. He had a plan yesterday which included a middle class tax cut that was twice as big as this one. He may have a plan tomorrow that will differ in another way. Earlier, he wanted to clear up the budget deficit in four years. I noticed that this plan has no mention of such a timetable. So I think that the economic plan, itself, is an example of how Gov. Clinton appeals to everyone and changes his stance from month to month, depending upon the audience. He was in favor of the Sea Wolf Submarine during the campaign. The primaries are over now and he's going to enact this huge 50, 60 billion dollar cut in defense in order to finance other things. I don't see any fixed approach there. I think Roger Wilkins has Gov. Clinton's number. I'm not sure if he has Jesse Jackson's. But I think he's got the governor's.

MS. WOODRUFF: Roger Johnson, back to you on that. What about Paul Greenberg's point that he, you know, Clinton is here today, in another position tomorrow, does that bother you?

MR. JOHNSON: Well, I don't think it's true. I don't know what the gentleman is reading, but everything I've seen and heard from Clinton has been, if anything, consistent. He has said in the plan that I just read that he'd like to cut the deficit in half in four years. There's this issue of the middle class tax cut. I think this current plan does not do away with that. It adds an alternative for people to take some credits on child care. Goodness, these problems are very, very complex we're facing. I don't know why we demand of someone to have all the answers on some Friday and hold to them for the next 20 years. I would hope that all of our leaders would learn as they go along. And I would hope they would modify some of their programs. This guy is talking to people, listening to people, and apparently, he'll make changes when he sees that they're necessary. I think he certainly has been consistent on the basics.

MS. WOODRUFF: Roger Wilkins, just quickly, last word. Is this something that bothers you, the change, or not a change, depending on who you listen to on this?

MR. WILKINS: Well, I think that this latest plan is encouraging and I, obviously, have only seen what's in the newspaper. But I'm pleased by it. But I have to take on Mr. Johnson. When Clinton comes in and trashes one of his major constituencies, black people, the most vulnerable constituency, but a vital one, and gives us the old democratic line, you've got no place else to go, and so you're going to just take it from us, whatever we're going to give you, it infuriates us. It is not political tactics because it tells us what Mr. Greenberg is telling us, that when Clinton comes to govern, if it is necessary to jettison our interests, he will do so, so that Bill Clinton, as my good friend, Jim Blanchard, says, Bill Clinton has a lot of teaching and persuading to do where I'm concerned and I think that's true of a lot of other black people.

MR. BLANCHARD: Let me just say though --

MS. WOODRUFF: Well, I'd like to -- we're going to have to --

MR. BLANCHARD: I don't think it's fair to characterize Bill Clinton's criticism of advocating killing as wrong, I don't, and bear in mind, the people who've known Bill Clinton for forty or forty-five years, from high school, grade school, to college, to law school, all of his life, are supporting him. You don't hear any of this nonsense that we're hearing from Greenberg here, who is one editor writing editorials, looking perhaps for perfection.

MS. WOODRUFF: All right.

MR. BLANCHARD: You don't hear it.

MS. WOODRUFF: We're going to have to leave it at that. It's June. We've got a few months to go. But we thank you all for being with us. Robin.

MR. MacNeil: Still ahead on the NewsHour, a preview of tomorrow's Israeli elections and a conversation with Paul Volcker. FOCUS - LIKUD VS. LABOR

MR. MacNeil: Tomorrow is election day in Israel, when voters choose a new parliament and perhaps a different approach in dealing with the Palestinians in the occupied territories. The ruling Likud coalition of Prime Minister Yitzhak Shamir is being challenged by a Labor Party coalition led by former Premier Yitzhak Rabin. Our pre-election report is from Liz Donnelly of Independent Television News.

MS. DONNELLY: Israel's prime minister, Yitzhak Shamir, is under greater pressure than ever before. Tomorrow's election should decide whether the country will continue with his hard-line approach to negotiations with the Palestinians, or whether the electorate's ready to be more flexible. Despite the enthusiasm of his supporters at an eve of poll rally, there are signs that Israelis are looking for change. The challenge comes from Yitzhak Rabin, Labor's new leader, deliberately selected to combat accusations that the party was soft on security. Labor hopes that his hard-line reputation will convince people Israel can maintain its defenses and still compromise for peace. [LABOR CAMPAIGN ADVERTISEMENT]

MS. DONNELLY: Rabin has been running an almost Presidential campaign, heavily selling his war record and achievement as chief of the staff during the Six Day War, which made him a national hero. In reply, a Likud campaign advertisement tried to destroy Rabin's reputation, quoting his air force commander in the Six Day War, who said Rabin cracked up under pressure. [LIKUD CAMPAIGN ADVERTISEMENT]

COMMERCIAL SPOKESMAN: [speaking through interpreter] Rabin was depressed, a broken man. He told he his mistakes had got the country in a mess. The chief military doctor diagnosed acute anxiety attack.

MS. DONNELLY: This negative campaigning strategy doesn't appear to have had the desired impact and opinion polls still put Labor slightly ahead. Senior members of the Likud government admit their campaign has had problems.

EHUD OLMERT, Likud Health Minister: I would say that this is perhaps the most difficult of all that I remember.

MS. DONNELLY: Why is that?

EHUD OLMERT: Well, normally I think -- we are 15 years in power - - this is a long time -- and I think normally there is certain attitude amongst the electorate that almost regardless of what you do and how good you are and how bad you are, people want a change.

MS. DONNELLY: Under Israel's system of proportional representation, the next government here is bound to be a coalition. So the aim of the challenging Labor Party and its allies is to win 61 seats, perhaps just enough to prevent Likud from putting together another ruling alliance. To do that, they have to make major in-roads into traditional right wing strongholds, like Bechamesh. This is an expanding Israeli new town of 18,000 people. The majority of those who live here are working class Sefartic Jews, who arrived in the 1950s from North Africa and the Arab world. The older generation have vivid memories of being discriminated against by the Northern European Labor elite, which was then in power. And this turned them into lifelong Likud supporters.

MAN: [speaking through interpreter] When my parents came from Morocco, like many other parents, they suffered. Now, under Likud, we're doing fine, thank God.

MS. DONNELLY: In the last election, Labor politicians who came here were pelted with rotten vegetables. But this year, well organized teams of supporters prepared a much friendlier reception for the former Labor leader, Shimon Peres. The party's message is that far too much public money is being spent on building settlements in the occupied territories at the expense of towns like Bechamesh. It hopes this will particularly appeal to the town's Russian immigrants, 40 percent of whom are unemployed. The Russians who've arrived here in the past two years are being wooed by all the major parties. Labor sponsored this lunch to persuade them that progress towards peace would mean more jobs for them.

SHIMON PERES, Labor Prime Minister 1984-86: My message was basically jobs and peace, or peace and jobs. I think it is an interdependent agenda, and that we are serious on making this agenda as the agenda of this country.

MS. DONNELLY: Labor's agenda would freeze most settlement building. This is Raquelim, the newest settlement on the occupied West Bank. Under the protection of the army, volunteers maintain a symbolic presence until the first houses are built. This settlement was started last autumn as a memorial to Raquelle Drack, who was killed in a Palestinian ambush. Labor would only allow settlement building for what it calls "security reasons," which would certainly not include Raquelim. And this prospect worries the volunteers.

ELISHEVA MAIREV, Raquelim Settler: [speaking through interpreter] All the effort we've put in here, the women who've sat here and sacrificed a lot, we'd like to see this achieve something. And besides, it's our duty to settle this territory.

MS. DONNELLY: A freeze on all settlements, not just ones Labor regards as unnecessary for security reasons, is the fundamental demand made by Palestinians. But their leaders, watching from the sidelines, confess they'd rather do business with a Labor government.

DR. HANAN ASHRAWI, Palestinian Spokeswoman: Well, it would just be a step, because I think Mr. Rabin has been busy, first of all, watering down the Labor Party platform in order to cater to the hard-liners and in order to try to get the middle-of-the-road vote, which is undecided. I also do not think you can take any statements extremely seriously when they are made within an election context.

MS. DONNELLY: The right wing religious parties who've been the Likud government's main coalition partners want settlements expanded, not stopped. Twelve thousand of them turned out at this rally in a strong show of support. But while opinion polls here are still putting Labor slightly in the lead, the governing Likud Party and its allies are hoping to turn this round, just like the conservatives did in Britain. CONVERSATION

MR. MacNeil: Finally tonight, the first in a new series of occasional conversations with people who've been thinking and writing recently about the U.S. and its position in the new world economic order. We begin tonight with Paul Volcker, chairman of the Federal Reserve Board from 1979 to '87. He's currently chairman of James D. Wolfenson, a New York investment firm, professor of international economics at Princeton University, and co-author of a new book, "Changing Fortunes, the World's Money, and the Threat to American Leadership." Mr. Volcker, thank you for joining us.

MR. VOLCKER: Nice to be here.

MR. MacNeil: In your book, you write that "The public mood in the U.S. and to some degree elsewhere is plainly," you say, "one of deep concern about the long run economic outlook, perhaps more than at any time in my experience." Are people right to be deeply concerned?

MR. VOLCKER: Well, I think what they are reflecting is a long period, a couple of decades now, of relatively slow growth, very little growth in incomes, actual decline in incomes to the average wage earner. I don't -- I think they're right to be concerned, because there are things that are wrong and a lot of that is symbolized and tied up in that great big budget deficit. I don't think they are right in thinking we can't deal with that problem. We haven't been very forceful about dealing with it.

MR. MacNeil: They're right in thinking we're not dealing with it?

MR. VOLCKER: I think they're right in thinking we're not dealing with it. I think a lot of people don't make the connection between the budgetary problems and some of the other policies and what they feel, which is lack of growth, a feeling of discomfort that comes from that, uncertainty about their jobs. But I don't think it's an irreparable kind of problem. We are still the strongest and richest country in the world. There are enormous opportunities out there. A lot of good things are happening in the world potentially. Can we compromise on them? That's partly a matter of will and policy.

MR. MacNeil: I'll come back to that side of it in a moment, but what are the dangers out there you see in the long run economic outlook?

MR. VOLCKER: Well, the danger for us is probably just continued sluggishness. If you just look at the United States, look at the danger in terms of lost opportunity. There's a commonplace one now -- those opportunities in Eastern Europe and Russia, in Latin America. You have opportunities that are literally without parallel for a kind of happy, growing, prosperous world. Can we capitalize on them or not? This all hangs in the balance.

MR. MacNeil: Referring to your -- I was just wondering in the dangers you see -- I mean, some people see that with the Japanese economy slowing down and the Germans using so much of their enormous resources to rebuild the former Eastern Germany and, therefore, high interests rates and deficits, themselves, and, therefore, not as much an engine of growth as they were, and the U.S. economy coming very, very slowly out of recession, that there could be just a kind of continued dampening, not actual recession but --

MR. VOLCKER: Well, I rather share that view in the short run. I think we'll have some recovery, but it'll be rather sluggish. If you're looking at a two-year time horizon, three-year time horizon, I don't think we're going to have a vigorous kind of expansion coming out of this recession. That's been typical in the past when you've had growths of 5 percent, 6 percent, it hasn't been unusual. I don't think we have room for 5 or 6 percent now. And that's a measure of the problem. It's not just that we're doing something wrong at the moment. We haven't done things right in the past to have the capacity and the efficiency to make the room for the economy to grow safely at 5 or 6 percent for a while, as we've been used to doing. That disappoints people. I don't think that's the end of the world. We've been growing rather slowly for some time. It's not a happy situation, but it's not the end of the world. What would really concern me is if in these next two or three years we don't do the things that are necessary to keep that expansion going, and become more vigorous and do the things to capitalize on I think the very real opportunities that exist.

MR. MacNeil: What are the things we need to do to do that?

MR. VOLCKER: Well, I'm afraid, you know -- it sounds dull and everything else -- but it is bound up in the budget deficit. We are a very low saving country. We are at the bottom of the world league in the amount we save. At the same time we run a great big budget deficit which uses up a disproportionate amount, sometimes all, of what we do save. So what do we have left to invest? A dynamic part of the economy, the part that supports growth and dynamism is investment. And we haven't allowed ourselves much room for investment. Our investment to a considerable extent is supported by borrowing from abroad. Well, that's better than not investing at all, but it's not as good as if we saved ourselves and didn't owe all this money to Japanese and others.

MR. MacNeil: Define what you mean by your subtitle, "The Threat to American Leadership."

MR. VOLCKER: Well, what I'm concerned about at this time basically of opportunity is that we basically feel poor. We may still be the richest and strongest in the world, but we're feeling poor. And there's a tendency to pull back, a tendency to pull back and resist spending what-- after all -- is not a very large amount of money for funding the IMF at this point. We're the last major - -

MR. MacNeil: The International Monetary Fund.

MR. VOLCKER: International Monetary Fund.

MR. MacNeil: Which in turn is where the money would come from to rebuild Russia and the former Soviet Union.

MR. VOLCKER: -- Russia -- same difficulties in financing the World Bank, same resistance to direct programs to assist Russia or elsewhere. You see it in non-budgetary terms, I think, in greater protectionist pressures. We've resisted those pretty well, but we are more protectionist today in the United States than we were 10 years ago. We may still be the leading country in the world in favor of open markets and open trade, but we've retreated from where we were 10 years ago. So I think the big question is: If we are in some sense in retreat in these areas, who, in fact, will lead the world to take -- who will martial and coordinate the development programs that are needed, who will maintain open markets, if we're not ready to? And we're doing -- we're still doing a fair job. We're not out in front the way we should be and the way I think we need to be.

MR. MacNeil: Well, Mr. Bush and even the Democrats would say, we can't afford it with the huge budget deficit.

MR. VOLCKER: That's wrong. You're talking if I can't afford it. I mean, we are -- I keep repeating -- we are the richest country in the world. If it comes down to taxes, there are a lot of areas that I'd like to save, and the first thing I'd like to do is cut parts of the budget that I want to cut. But if we can't reach some consensus on that, we are, in fact, the lowest tax country of all the major industrialized countries. And I don't think we can sit here and just rule out taxes from any consideration when we've got a $400 billion budget deficit and we're not willing to reduce expenditures. Fine, let's reduce expenditures in ways that don't hurt the economy, let's do it, but I don't see us doing it.

MR. MacNeil: But you point out in great retail, recounting the history of what happened to the U.S. dollar since the period when coming out of the Second World War, the U.S. was the preeminent economy, the dollar was very strong, and the U.S. exerted enormous economic leadership at the time, and helped to create an international economic order that achieved enormous prosperity for a long period of time.

MR. VOLCKER: That's the theme of the book.

MR. MacNeil: Yeah, right.

MR. VOLCKER: One theme of the book.

MR. MacNeil: And that has now begun to disintegrate and, in part, is, if I follow your argument, because the U.S. economy relative to the Japanese and the German has become weaker and that's symbolized by the fact the U.S. dollar has repeatedly gone down in value.

MR. VOLCKER: Precisely.

MR. MacNeil: Well, with that new weakened position relative to those countries, how can the United States step up to the bat and exercise the kind of leadership you're talking about?

MR. VOLCKER: It is a weakened position relative to those countries. After all, part of the object of our policy was to strengthen them relatively. They were devastated after the war. We were king of the mountain. We had no competitors. Now we have no competitors. But I think we still are in the position to be the strongest. We have to lead now by example. We have to lead through cooperation, lead in a different way than we were able to lead after World War II. But I still think we have to be out in front to coordinate the effort. Somebody's got to be chairman of the board, so to speak. You may have a board --

MR. MacNeil: When the U.S. tried to do that recently, went to Germany at an economic conference and lectured the Germans on trying to engineer some growth there and they turned around and said, in effect, you can't practice economic leadership abroad unless you're going to practice it at home, meaning cut your budget deficit.

MR. VOLCKER: I happen to agree with that. I mean, it sounds rather hollow when we go around and lecture the Germans or the Japanese and somebody else what they should be doing with their economic policy, what they should be doing precisely about their budget, when we've been frozen on this issue for seven or eight years.

MR. MacNeil: Do you have confidence that the economic system and this Presidential year, the political system -- I'm sorry -- in this Presidential year is going to be able to metabolize that problem?

MR. VOLCKER: I have no basis for confident that in this particular election year we are going to see a dramatic crystallization of an effective program right now. I think the relevant question is out of this electoral process, can we create some dynamics that produce it next year?

MR. MacNeil: The G-7, the seven leading industrialized nations, meet again next month. Should the United States there be trying to initiate some new model for international cooperation, some new initiative?

MR. VOLCKER: We haven't got any new model. I think some of the old model is pretty good. Are we able to carry out the old model? But right now in that meeting, I presume, there is a considerable need to make sure people understand what's going on in the old Soviet Union, in Russia, and elsewhere, what needs to be done to coordinate assistance. I don't expect any dramatic initiatives other than that. But, you know, it's an interesting, symbolic indication of where we are, return to the point that we apparently will go into that meeting without having ratified our share of the IMF quota increase, which doesn't even -- in ways too complicated to explain now -- cost you budgetary money. It's a kind of revolving fund. But we don't get to it. The originators of the International Monetary Fund would like to position ourselves of being influential, at least in coordinating aid, but we can't get over this in some sense fairly routine hurdle.

MR. MacNeil: We began talking about the public mood. What about your own mood? You were educated and you came to public service in a time of great optimism for Americans, unlimited horizons, ever rising standard of living. What is on the horizon now, and how do you -- what is your own state of optimism or pessimism about this?

MR. VOLCKER: Well, my sense of optimism has been diminished by what I see going on in these last few years. You see it in quite uneconomic ways, in ways the public service, itself, isn't held obviously in the respect that it was held when I was much younger. And I'm not talking just about the Congress. It's certainly true with the Congress. It's true with the Civil Service and the bureaucracy downtown. And I don't think that's a good thing for the country, when it is indicative of something being the matter. But I am optimistic in the sense that I think none of this is irreparable. By any means, it does not -- we haven't got the kind of problems that Latin America has, that Russia has, that Eastern Europe has. We casually say, look, fix up your budget deficit of 5 percent of the GNP and do it by next Tuesday. But we haven't done it for five years. We ask them to do all kinds of things that we are not prepared to do. We have to make fairly marginal changes. So I'm optimistic in the sense that it's a soluble problem. We get on top of it. It takes some effort. But it doesn't take any Herculean sacrifices. In fact, the net result will be pretty promptly faster growth, more prosperity.

MR. MacNeil: We have to leave it there. Mr. Volcker, thank you very much for joining us.

MR. VOLCKER: Thank you. Nice to be here. RECAP

MS. WOODRUFF: Again, the main stories of this Monday, President Bush reacted angrily to reports that Ross Perot had investigated the financial and professional conduct of the Bush family when Mr. Bush was Vice President. Perot's spokesman denied any illegal investigation took place. And the Supreme Court struck down a St. Paul, Minnesota law banning cross burnings and other expressions of racial bias. While the court deplored such so-called "hate crimes," it said the St. Paul law was a violating of free speech. Good night, Robin.

MR. MacNeil: Good night, Judy. And that's the NewsHour tonight. We'll be back tomorrow night. I'm Robert MacNeil. Good night.